The Italian government has approved a bill implementing European Directive 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain.
Aimed at “rationalizing and strengthening the current legal framework towards greater protection of suppliers and operators,” the law prohibits companies from imposing burdensome contractual conditions.
The trend towards ever-lower prices can furthermore determine a gradual decrease in the profitability of operators, making it less convenient to grow olive trees, produce and package extra virgin olive oil.
It also forbids the sale of agricultural and food products at prices below production costs, which is likely to affect the olive oil sector.See Also: Olive Oil Promotions Boost Retailers’ Sales, but With a Hidden Cost
“Thanks to this regulatory instrument, the relations within the olive oil supply chain can be smoother,” Anna Cane, the president of the olive oil group of the Italian Association of the Edible Oil Industry (Assitol), told Olive Oil Times. “This prepares the ground to relaunch our action against the below-cost selling of extra virgin olive oil in large distribution channels that our sector has been trying to achieve for years.”
Assitol has already presented a proposal to the Italian and European authorities calling for a ban on selling extra virgin olive oil below cost along with appropriate administrative sanctions.
“We hope that both national and European authorities will pay attention to this issue soon,” Cane said. “This is not only an Italian problem but also involves the majority of large distribution channels on a global level.”
The current legislation in Italy allows for extra virgin olive oil to be sold at a lower price than its cost only once a year, but some large retailers sell their extra virgin olive oil below cost outside of this period.
“This causes the degradation of the product, conveying the idea that the extra virgin olive oil is a commodity of modest value,” Cane said. “The trend towards ever-lower prices can furthermore determine a gradual decrease in the profitability of operators, making it less convenient to grow olive trees, produce and package extra virgin olive oil.”
“The risk is that the end consumer price, in most cases, does not cover the production costs,” she added. “This does not make sense since the extra virgin olive oil is one of our key export products and is highly appreciated for its health value.”
The Ministry of Agriculture expressed satisfaction over the bill, emphasizing that, thanks to this measure, “the power relations between the parties in the commercial exchanges are definitively rebalanced, guaranteeing a more equitable position for producers and farms harmed by the unsustainable practice.”
A complaint form shall be made available on the Ministry’s website for reporting cases. The central Inspectorate for the protection of quality and fraud prevention of agri-food products (ICQRF) is designated as the supervisory authority.
“In substance, the decree against unfair commercial practices can open the door to other measures, useful for restoring profitability to the world of olive oil,” Cane concluded. “We now ask all the stakeholders of the olive oil supply chain to share our commitment against the below-cost sales.”